Top Risks to Small Businesses and How You Can Mitigate Them

If 2020 has taught us anything it’s that, although things are looking up, risks to small businesses still abound. Here’s what to look out for and how to mitigate that risk.

The ever-increasing competitive risk

Many companies chose to steer away from aggressive competitive strategies in 2020. However, leaders will be looking to regain footing in their prospective industries in 2021. Acting aggressively may expose your business while playing conservatively could invite more competition.

Managing competitive risk depends on how well you can balance between improving your product/service and cutting costs. Ensure you beat out your competition on quality before economizing. However, doing this might need you to change your team orientation.

The uncertain external risk

Stakeholders and investors will expect business growth as the economy starts to rebound. However, expansion is almost impossible with top managers taking the conservative approach. Taking substantial risks, therefore, becomes a necessity for growth.

How do small establishments mitigate business risk in 2021? Well, it starts with simultaneously expanding your business in multiple directions. Doing this gives you a natural hedge in case one direction fails. The numerous small business consulting firms could also help you better plan for business growth to avoid risks.

The catastrophic IT security risks

The recent hacking of SolarWinds, an IT infrastructure provider for multiple mega-companies, showcased the crippling problems that come with security risks. However, what does this mean for small businesses? Well, it exposes the dangers of over-reliance on a single IT infrastructure to provide security.

Mitigating the catastrophic IT security risks starts with the diversification of infrastructure providers for small businesses. However, doing this can be rather expensive when you are on a budget. Therefore, it will help to increase the security protocols on the business level.

The digital disruption risk

The arrival of the pandemic saw the obliteration of traditional stores by digital businesses. Consumer behaviour shifted towards instant gratification and online shopping. It is doubtful that this trend will change anytime in the future.

Luckily, you can mitigate this risk by developing an online store. It will also help to focus more on your customer needs once you go digital. Ensure you stay on top of client’s needs and ever-changing tastes.

The looming operating risk

A return to normal will see an end to remote working. However, your best people might remain adamant about working from home. When small businesses take away the remote-work option, they risk losing their best staff.

Therefore, small businesses need to keep the remote work option in 2021. Ensure your staff feels comfortable, thus mitigating operating risk. It will also help to incentivize workers into going back to the office.

If you’re looking for an experienced accounting partner who will help take your business to the next level, contact us for more information. Visit our blog for more articles, news and updates about small business accounting, tax planning, CRA audits and bookkeeping.